This is just plain wrong for two
reasons (and Hastings almost certainly knows this).

The most obvious is that the
legacy TV giants own Hulu. On Thursday,The Wall Street Journal
reported that
Hulu was in talks to sell a piece of itself to Time Warner
in a deal that wouldvalue the company between $5 and
$6 billion. If this
deal goes through, it would make Time Warner an equal stakeholder
to Hulu’s current owners, and would mean that Disney, Comcast,
Fox, and newcomer Time Warner would each own 25% of Hulu.

Since they own Hulu, its rise
wouldn't be be a threat unless what came with it was the
destruction of their general business model. Basically Hulu has
to, eventually, make up for whatever revenue it takes away from
its owners.

Which brings us to the second
reason why Hastings is wrong. He implies that Hulu is more likely
to poach traditional cable’s customers because its business model
is closer to theirs. This makes sense. Getting a new episode of
your favorite shows every week, right after they air, is
essentially what happens right now with most cable packages (that
include on-demand functionality). But because Hulu is making a
product similar to cable, it is actually preserving the
mode of doing business to a large extent.

Netflix, on the other hand, is
blowing it up.

Netflix releases an entire season
of its original shows at once, and Netflix has no ads ever (Hulu
does have a new “ad-free” option,but even that isn’t completely ad
free). The reason why
Netflix is more disruptive to the industry than Hulu is because
it threatens to actually change user behavior.

Netflix customers get used to
getting an entire season at once, and seeing zero ads. And it’s
annoying for them when traditional TV makes them watch ads
and wait a week for new episodes. There isalready evidencethat the influence of Netflix
might be starting to force cable networks to cut back on the
amount of ads they are showing.

This is what is really scary for
the traditional cable industry — that Netflix will turn their own
subscribers against them, and force them to make radical
concessions to stop people from cutting the cord.

Reed
Hastings undoubtedly knows this. And when he says Hulu
is a bigger threat to the established players in the industry
than Netflix, it is almost assuredly smoke and mirrors. It’s a
performance.He knows
better than anyone that Netflix is trying to dismantle the linear
TV model piece by piece.